Under Market Value Score
Purchase Price $479,000 | New Appraised Value post renovation $570,000
Our Sydney based clients were looking for an investment in Melbourne. Their long term goal was to expand their portfolio and do it right.
Our Sydney based clients were looking for an investment in Melbourne. Their long term goal was to expand their portfolio and do it right. Having had an experience with property previously which did not go as well as they hoped they decided to get some professional help on the ground to help them.
Our client was very open to exploring different areas, the only preference they did have was for a house on its own land rather than an apartment or town home (and we couldn’t agree more with their choice). Having a good grounding in the fundamentals of investing in property our client was also interested in the growth drivers for the area we had recommended. We supplied the relevant information and settled on an area we have pre-selected for its growth opportunities.
Since our client wanted to expand their portfolio in a short period of time, a pre-planning/strategy session was a must. Once completed we identified that the client would need equity to continue their portfolio so we opted for an area where we felt the growth would be quick and we could access an “add-value” opportunity. The compromise was rental yield, however we had a plan to bring this up as well
After scouring the market for both on and off-market opportunities 2 properties were recommended to our client. The first needed substantial renovations, was off-market and had approximately $60,000 worth of equity post renovation. The only snag we discovered after making our offer was the vendor was fixed on his price (and wouldn’t budge) and what he wanted was more than the market value, so we opted to pass on this opportunity.
The next property was a fabulous buy which I bid at Auction for. We feel we scored the property under market value and since purchasing the property has increased in value in just 3 months.
To gain even more equity from this property our client had us project manage a renovation for them and we are all thrilled with the result.
Purchase Price $479,000
New Appraised Value post renovation $570,000 (by two local agents specializing in this “patch”)
Rent before renovation $350pw
Rent after renovation $400pw
*Note- In full disclosure we would like to add that we had the property valued after the renovation was completed and it did not come in where we felt it should based on our strong market knowledge. We are currently assisting the client to contest the valuation and hope they receive a new valuation more in line with values in the area. We will update you with the progress of this in due course
Current bank valuation $520,000. Renovation spend $24,500
November 8, 2016 Case Study